With the advent of the World Wide Web and the ease of entry enabled by the Internet, electronic commerce is becoming an increasing reality, with a consequent growth in the number and variety of information providers and e-commerce sites. While this growth generates a diverse set of offerings from which consumers can only benefit, it also makes it hard for people to choose, in part because it is difficult to judge a priori the value of the offerings. In addition, since providers of electronic commerce sometimes lack recognizable reputations and can offer similar services, it is seldom possible to make optimal decisions as to which sites to access and which ones to avoid. As with many other situations where choice is costly, people resort to a cooperative mechanism which relies on the collective search performed by a whole community to find desirable and useful sites. Large groups of people surfing and buying on their own can sample a much larger information space than single individuals, and any exchange of relevant findings can increase the awareness of possibly interesting sites. Even though recommendations, both personal and institutional, can be unreliable and highly idiosyncratic, they decrease the cost of searching for optimal sources of information, while leading to the discovery of new sites and improved ways of surfing the Web.
Given these considerations, one would expect to find within the Web sites and communities that issue useful recommendations on a number of topics. See W. C. Hill, L. Stead, M. Rosenstein and G. Furnas, “Recommending and evaluating choices in a virtual community of use”, proc. CHI'95, (1995), 194-201; C. Avery and R. Zeckhauser, “Recommender systems for evaluating computer messages”. Communications of the ACM 40, (1997), 88-89; and N. Glance, D. Arregui, and M. Dardenne, “Knowledge pump: supporting the flow and use of knowledge”, in Information Technology for Knowledge Management. Eds. U. Borghoff and R. Pareschi, Springer (1998). This information can then be used to create recommendations for other users and to identify similar individuals, thereby helping to make informal communities apparent. But while a great deal of economically useful information is distributed widely within groups of people such as large organizations, communities of practice (see B. A. Huberman and T. Hogg, “Communities of practice: performance and evolution”, Computational and Mathematical Organization Theory 1, (1995), 73-92), scientific communities and the economy at large, privacy issues make it hard to successfully exploit that knowledge. The limitations range from having to assess the quality of a recommendation from a group whose preferences might differ from the inquirer, to the natural reticence people have to reveal their preferences to an anonymous group with possibly different values. One issue that makes recommender systems perform below their potential is the difficulty of convincing potential advice-takers of the credibility and reliability of the recommendations. This depends in part on the willingness of potential recommenders to make available the right information at the right times. An important factor that dissuades potential recommenders from participating effectively is the risk that failed advice could lead to bruised reputations and liabilities. P. Samuelson, “Liability for Defective Electronic Information”, Communications of the ACM 36, (1993), 21-26.
As in the physical world, there exist a number of useful mechanisms to circumvent problems of privacy, trust and liability. For example, a useful strategy for maintaining privacy consists in the anonymous posting of information. In recommender systems this can be useful when the recommendations are based on coarse characteristics such as the number of people voting for a particular choice. But anonymity has the drawback of preventing users from learning the usefulness of recommendations from particular people, track trends over time, and to use reputations which are built up over repeated interactions. The consistent use of pseudonyms can address some of these issues, but not all. One drawback of pseudonyms is that the very link which establishes reputation over time becomes a vulnerability if authorship can be established by other means for any pseudonymous message. Issues of privacy can also be tackled by the use of trusted third parties to mediate the exchange of information. However, it can be difficult to get everyone in a community to agree on a suitable third party, particularly when new users continually enter the system. Furthermore, the collection of all information by a single third party can lead to a system-wide failure if such a party is compromised. What is truly desirable is the enhancement of privacy and trust in electronic communities without having to resort to anonymity, pseudonymity, or trusted third parties.